9/21/26 Your Money Under Pressure: Interest Rates, Gas Prices & Investment Decisions

The Moneywise Radio Show and Podcast Monday, September 21st BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Radio Show & Podcast" call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com https://www.moneywiseguys.com/ facebook: Moneywise_Wealth_Management https://www.facebook.com/moneywiseguys/ LinkedIn: Moneywise_Wealth_Management https://www.linkedin.com/company/moneywise-wealth-management-bakersfield/ The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.

• 0:00Speaker 00

  Live from the basement inside the historic Woolworth Building in downtown Bakersfield. Call or text in at 661-396-1000.

• 0:37Speaker 00

  Now, let's start the Money Wise Show.

• 0:41Speaker 01

  That's right. Welcome to the Money Wise Show. I am back Friday to a Monday. I'm just making it happen. I'm your host today, Chris Pelster. Join with?

• 0:50Speaker 02

  Sammy Abiyawi.

• 0:51Speaker 01

  And we don't get to?

• 0:52Speaker 02

  No, we don't.

• 0:53Speaker 01

  We don't get to be on the show very often.

• 0:54Speaker 02

  Yeah, I did keep the dream team apart just because we do so much good.

• 0:57Speaker 01

  Yeah, I had to, I had to actually, I had to pay Steven. I said, dude, Steven, I said, put me on with Sammy.

• 1:02Speaker 02

  Yeah, he can't, he can't handle, he can't handle all this goodness in one room.

• 1:05Speaker 01

  Yeah.

• 1:06Speaker 02

  So he has to separate us.

• 1:07Speaker 01

  Yeah.

• 1:09Speaker 01

  There you go.

• 1:10Speaker 02

  It's like, it's like the Dolphins and the Steelers both in the same room.

• 1:14Speaker 00

  Oh, yeah. So much trash.

• 1:16Speaker 01

  Yeah. How'd your weekend go, Steven?

• 1:19Speaker 00

  It's been about the same for about 20 years.

• 1:21Speaker 01

  Ah, bummer. Yeah, dude.

• 1:23Speaker 00

  But it's a rebuild. It's a rebuild, they say.

• 1:26Speaker 02

  The rebuild has been happening.

• 1:27Speaker 01

  Slowly and steady rebuilding.

• 1:29Speaker 00

  Sure. Why not? Let's call it something.

• 1:32Speaker 01

  All right. Well, we are live from the basement of the historic Woolworth Building in downtown Bakersfield for the next hour. You are on News Talk 961, 1230 K E R N. And streaming live on a great website, MoneyWiseGuys.com. Check it out. You also can go to your favorite podcast site. And you guys are what make the show great. You can call or text the show 24 hours a day, 661-396-1000. We have some great comments that have come in from not only our conversation last week. The Fresno Diocese pension folding has ruffled a few, not ruffled feathers, but, but definitely made people scratch their head as far as pensions and what that means. And then right now with everything going on, the markets are definitely volatile.

• 2:17Speaker 01

  You know, kind of up and down. You have interest rates being impacted, going back to what the feds decided to do on the 16th. So good to, good to know that we have a, we have a banker in the house.

• 2:27Speaker 02

  Yeah.

• 2:28Speaker 01

  Knows a little bit about Fed rates. So we'll go over that a little bit.

• 2:30Speaker 02

  Just a little bit.

• 2:31Speaker 01

  Yeah. But, you know, with that being said, with, with the original hike of the rate, the market didn't like it. The market's pulled back a little bit. You come back, you open up your screen on Monday and boom, green on the screen. We have the S and P 500 at 7771. It is up 1.6% right now during trading day. We have the Dow also in positive territory, about 80 basis points is a fancy word for 0.8%, 52,088. And you also have the NASDAQ up 2.27. So we always talk about the NASDAQ being tech-heavy. It's at 27,125. We have the NASDAQ tech stocks running this morning.

• 3:14Speaker 01

  Obviously, no big shocker. It's coming off of some volatility and a little bit of a pullback last week. We always like to talk a little bit about, you know, perspective and, you know, like not getting caught up. You want to know what's going on right now, but so many of your investment decisions, so much of winning with money. It is long-term, even if you're like in retirement and you're taking money out of your account, like you're still long-term investments. You're still just trying to create income for yourself. The rest of it's going to do what it's going to do. Don't get too caught up in it, but there's no doubt that there's some things going on right now that can create some, some emotional aspects. And so we got some great questions to go over today from you, the listeners.

• 3:55Speaker 01

  Yeah. So we'll go over that. But with that being said, the stock market kind of moving in positive territory. A lot of times there's a little bit of a teeter totter. Gold has done the opposite. Gold's at 4,386. It's down almost 1%, about 90, about 0.9% there. Bitcoin has actually jumped way up. So it's moved in line with the markets. It's up 6%. It's at 86,040 there on Bitcoin. And silver, I don't even have the numbers.

• 4:27Speaker 01

  So we'll have to look it up and get back to you. But right now, crude oil, which is one of the things that some of the things we're going to talk about today and gas prices, it's at 9249. It's down 3.7%. Jumped up last week, pulled back this morning. But that is the market number. So Mr. Banker, what, what do you make of all this?

• 4:48Speaker 02

  Interest rates, it was, it was expected for, for the Fed to increase the rates last week. And in fact, they're expecting the rate to be increased one more time before the year ends. What does that mean for us, consumers? Well, your credit card debt just got more expensive. Your mortgage, if you were to try and to refinance, maybe you want to rethink that for the moment. I mean, we jumped above 7%.

• 5:17Speaker 02

  For small business owners, lines of credits now are going to be more expensive. So your borrowing or your interest expense on your balance sheet and your, and your P and L is going to be a little bit more. So people might pull back on certain investment decisions if you're a small business owner because of that. So if you're thinking to, hey, if you're a seasonal business, Christmas is coming and you're going to go and borrow on your line of credit to buy some inventory to get ready for Christmas, now it's going to be a little bit more expensive.

• 5:48Speaker 01

  Right. You know, and it's, it's business as usual for most folks. And so just kind of trying to make sense of all that stuff for some of our investors or conservative investors, or if you're somebody that has some of your emergency savings or something sitting at your bank. Over the last six, seven, eight, nine months, you've maybe watched your money market rates or your CD rates kind of creep down. They're not offering very long CD rates. They might be a little bit higher, but they won't offer you more than a six-month rate because they were anticipating this, these hikes to begin.

• 6:18Speaker 01

  And so you might be able to make a little bit more money on some of your short-term or, or liquid cash. You know, they're in the bank with money market rates and CDs. So there's all these moving pieces with money and things to think about. So again, we're trying to make you money wise, keep you money wise, help you navigate all the, the jargon and the headlines. And there's some, some comments that with the questions that came in today. So I was going to throw out silver. Silver is about 6574 an ounce right now there. If you're looking at silver. So just wanted to throw that out there for our listeners. So let's go ahead and jump into some of these questions.

• 6:52Speaker 02

  I'll read the first question. Hey, guys, can you, can you guys explain this to me like I'm a five-year-old? But with the Fed raising rates, is that actually good for us or is it mostly good for Wall Street? Yeah, very good question.

• 7:06Speaker 01

  Yeah.

• 7:07Speaker 02

  And you and I talked a little bit about it before we started the show.

• 7:11Speaker 01

  You got to talk in your baby voice, Sammy, for a five-year-old.

• 7:14Speaker 02

  A five-year-old. I'm sorry. I don't know if I can do that.

• 7:16Speaker 00

  You do it. You know, I'm saying that quick so quick.

• 7:19Speaker 02

  I can do a very mean, like French accent, but I cannot do a baby voice.

• 7:22Speaker 01

  That's what the listeners don't understand. If you, if you go out on a limb and you do something to try to be funny, you know that it's going to become one of Steven's clickbait things for his, another show someday.

• 7:31Speaker 02

  I got the 40-year-old virgin. He's the 40-year-old virgin.

• 7:37Speaker 01

  I'm sorry. This is a, this is a serious topic. Let's get back on.

• 7:40Speaker 02

  But, but, but Wall Street, to your point from earlier, Chris, Wall Street does not like higher interest rates because it just throws so much unknown things in, in, in the market. And it just makes it a lot more unpredictable.

• 7:53Speaker 01

  Yep.

• 7:53Speaker 02

  Versus predictable, right? And Wall Street likes to be consistent, right? And, and, and growth and prices and whatever. So it's not, Wall Street does not like this volatility that we're, that we're having.

• 8:08Speaker 01

  And I will say that, that, so think about it this, in this sense, when you were just talking about businesses a little bit ago, do you think Wall Street likes expensive money or cheap money? They like cheap money.

• 8:18Speaker 02

  Yes.

• 8:18Speaker 01

  They want interest rates and borrowing rates to be low. But like you just mentioned, they don't like uncertainty. So if rates are going to be high, they want to be able to plan for that.

• 8:28Speaker 02

  Yes.

• 8:28Speaker 01

  And when you have the Fed chairs, like half of the Fed chairs saying raise them and half of the Fed chairs saying lower them, they don't like that either because there's uncertainty.

• 8:37Speaker 02

  Uncertainty.

• 8:38Speaker 01

  They're not sure what they're going to do. If the feds come out and say, hey, we're raising rates for the next three quarters and this is what we're doing. And it seems like there's a consensus. Well, then businesses can plan accordingly.

• 8:49Speaker 02

  And why, and, and, and this is a very good point. Why do businesses need to plan? Because if you are a very good business, right? With, with, every good business has a budget. Within that budget, you want to plan for your, all your expenses, including your interest expense.

• 9:04Speaker 01

  Right.

• 9:05Speaker 02

  And for a lot of the businesses, that's a large expense. And if it's unpredictable, then you really don't know to what extent you're going to have to be spending money on that specific item on your, on your, on your P and L. And you do want to know that. I mean, it's, it's very important for a business to know where they're going to be allocating their capital and their expenses.

• 9:26Speaker 01

  Right.

• 9:27Speaker 02

  And absent of that, it just throws a wrench at the business owner or their CPA or controller, you know, especially small businesses.

• 9:37Speaker 01

  Yep. And so, you know, like, like, you know, big picture, like you try to break all this stuff down. Like, that's what's crazy about we're unindated with information and we have news outlets all over the place, but it's so hard. But then when you think about it and break it down into simple terms, like you mentioned, talk about it like your five year old, we'll just kind of think about it. Like if they know that rates are going to be going up for a while, well, maybe there's a project that this company's going to wait another year to do it because maybe rates will come back down. They're going to, they're going to table that, that expenditure or that project or whatever they're doing. Like, they're trying to make these business decisions that are, most of them are thinking five, 10, 20 years down the road, trying to make some decisions based on all this stuff. And to an extent,

• 10:19Speaker 01

  that's what you need to be doing as an individual investor, your own personal wealth plan. Like, yes, you want to know what's going on right now. Interest rates may change around a little bit, but most people, you need to be making investment decisions based on five, 10, 20 years down the road, even if you're entered into retirement, even if you're 70 years old, and I know that, you know, the, the, the plan starts to shorten when you're 70, but you still need to be making income for yourself. You still need to have your investments for the next 20 years. You know, nobody knows exactly when what we refer to of end of plan is, we're all going to go to end of plan. But that's why a good, good financial plan, good investment strategy.

• 10:59Speaker 02

  I was about to say that.

• 10:59Speaker 01

  Yeah, it's going to address all those things and it's going to try to give you the most peace of mind. I'm not opposed to listening to news and all that stuff, but I do see a lot of people get so wrapped up and so they're not even getting to enjoy this phase of life that they worked so hard to get to.

• 11:14Speaker 02

  It's funny you say that because you start clicking, let's say I'm on my Instagram and I start clicking and I, and I last on this video, you know how we scroll, right? Then you just start to like, okay, let me listen to this whole video. It's funny how the next video is the same subject, right? Like, and then the video after that, and all of a sudden your feed is all that specific subject. And that's what a lot of time happens, especially when you're on social media, you get rage baited into certain things. And to your point, this is a long-term play. This is not a short-term play.

• 11:47Speaker 01

  Yep. And let's, let's jump into this next message because it totally ties into this. So I don't know if they plan to do this, but another message came in and said, I'm trying to be smart, but I am sure I'm not the only one that is so nervous with this roller coaster of the markets. And every time I see scary headline, I want to move everything to cash. How do you know when you're being smart versus just overreacting with these crazy clickbait type stories? So literally exactly what we're talking about right now is what this next comment that came in. And if you've listened to the radio show for, we've been on the air for 20 years, we have consistently said the same things. It's not all or nothing. You don't jump all into the market and get all out of the market. You

• 12:29Speaker 01

  be money wise. You have different goals for different parts of your portfolio. You have realities of your situation that only you know, meaning the only reason I would say to get completely out of your investments is if you had $60,000 worth of investments and I'm going to buy something for $60,000 in three months from now. Well, maybe you shouldn't have that money super invested. Maybe it should be in a cash equivalent, whether at the bank or in your brokerage account, because there's options for cash there. Like, that's probably a bucket of money that you're not going to be aggressive with. So you have to really, you know, remind yourself, what is my goal of this money? What is my goal of this chunk of money? What is it? Is it just going to create income? Because if all you're doing is taking income out of this bucket, you stay invested.

• 13:13Speaker 02

  Yeah, for me, I'm not a licensed financial advisor, but I am an investor. And the one thing I typically look at is my risk. What's my risk profile? And my risk changes with the age, it changes where, where I'm at in my, in my life cycle, or where the market is at. So sitting down with a financial advisor, again, to your point from earlier, Chris, is very, very important because your risk assessment dictates or is going to help maneuver you through this minefield. That's the market. That's the economy. And again, it depends on what your plan is, right? And that's why it's very important to, I mean, if you're

• 13:55Speaker 02

  able to do it on your own, do it on your own, but plan accordingly. And be very, very, that's, I always preach this, be very realistic with your plan and your budget. Because a lot of the time, what I think I fail as an investor or just as a consumer is I'm budgeting, but things that I do every month needs to be on that budget, right? Right? If I'm going on shopping every month, then I need to allocate what 200, 300, whatever that amount. And that's what I think sometimes we miss.

• 14:27Speaker 01

  Yeah. Yeah. You know, we always say it on the show and, and I'll continue to say it. There's two things that should not be in your investment portfolio, which is fear and greed. You want to get those out of your portfolio. Okay. So if you're not fearful, you're making wise decisions based on what you know and what you understand, or maybe you're working with an advisor, you're help, you know, helping you make good decisions. You're, you're trying to think methodically about what you're doing. You get fear and greed out of there. You don't want to be greedy either. Like you do want to take on calculated risks, but not be greedy. Usually greed is what gets people in trouble because you're trying to make a lot of money quickly, whether it be a hot stock pick, or you're trying to time the market. Because going back to the whole thought process of jumping

• 15:12Speaker 01

  out of investments and going to cash, you trade one risk for another. You're afraid your account's going to go down because of the markets. That's a risk. And it does, the stock market does go up and down. But the risk you run when you go all out is you have to be right going back in.

• 15:29Speaker 02

  And yes.

• 15:29Speaker 01

  You have to, you have to time the market twice. You jump out and then you jump back in. And I can't tell you how many times I've seen people jump out, maybe not even at the right time. Now, here's the thing I'll tell you, those people felt good when they made that decision. It did. It made them feel good. Like, phew, I don't have to worry about that stress anymore. But then a lot of times without realizing it, or when they finally decide, okay, I'm going to jump back in, you have to time it right.

• 15:57Speaker 02

  Yes.

• 15:57Speaker 01

  Or else you could have actually just really made your situation worse. So even though you felt better, your situation actually is worse. And the times that I can tell you that that's happened to investors and people, and I'm not discounting what people feel when they see their account fluctuate. And that's why we've talked about before, like, we have tools where we can stress test your portfolio. Hey, if 2008 happened again and your account did this, are you going to be okay with it? And I tell people that it's a great example of 2008 because the market did pull back heavily, but it also recovered within a year and a half or two completely. And then from that point forward, we went on one of the longest bull runs ever up to 2020. And if you stayed with your strategy

• 16:42Speaker 01

  and you still made good decisions as far as how you needed your money, were you just pulling out money for income? Now, again, if you were somebody in 2007, 2008, and you were about to pull a huge chunk out of your investments to do something on a short term, it shouldn't have been full tilt in the stock market. You have to make wise overall decisions and think methodically through it. And sometimes that can be the biggest benefit of working with an advisor who has seen this over.

• 17:08Speaker 02

  And over again.

• 17:09Speaker 01

  And over, and over. Yes. And, and I know sometimes it might seem like, well, Chris doesn't seem to even, I do care. I care very much. And I've watched people try to avoid losses. I've watched people try to time the market. And I'm telling you, you want to just have a good, solid plan, make wise decisions so that you can focus on what matters most in life. And that's what I've loved about being at Money Wise. It's not fear that we're pushing. It's not greed that we're pushing. It's a well-balanced approach to all things financial. We have phenomenal investment solutions for folks and, and, you know, and then even now, like, there's been a big push in our firm to make sure people even have a good estate plan.

• 17:47Speaker 02

  Yes.

• 17:48Speaker 01

  You know, because people are getting older and we're talking about this gray tsunami, they call it, where all this money's going to be transferring from grandmas and grandpas down to kids or grandkids. And if you don't have things set up right. The government gets in the way.

• 18:01Speaker 02

  The government gets in the way, your family, the things that you worked for, the things that maybe you wanted to happen, but you did not plan for, will not happen at the speed with which you wanted to, to take place. And, and that's why estate planning is very important. A lot of the time, a lot of people ask, "Well, I only have a house. Why do I need a trust?" Well, you still need a trust, in my opinion. I mean, as long as you have one asset, in your opinion, you want a trust. Because it's just facilitates.

• 18:30Speaker 01

  Yep.

• 18:31Speaker 02

  You're passing even. You don't want to be a burden after.

• 18:35Speaker 01

  Yep. And, I mean, like, we're not estate planning attorneys, but having this discussion with so many people and walking people through, through these phases of life is, if you have a, a, a piece of real estate that's under a certain amount, you might qualify for what's called a small estate affidavit. So you might be able to avoid probate, but most people are over that, when, especially living in California, median home price is way up there.

• 18:58Speaker 02

  Yep.

• 18:58Speaker 01

  And so, first and foremost, what you're talking about too, is a lot of your accounts, your bank accounts, your investment accounts, your brokerage accounts, you can have beneficiaries attached to them, which means it's not going to go through probate. So start with the most simple, and then definitely address whether or not you are somebody who needs to also have a living trust if you own your piece of real estate.

• 19:18Speaker 02

  So here's my banker hat for you. So if you do have an account at the bank, and you don't have a trust, you can still designate a beneficiary for that, for that account. You can go to the bank, you can talk to the new account person, or the one that opens, and is like, "Hey, I want to add a beneficiary to my account." And you can do that. A lot of people don't do that, because it's not common knowledge, or you have to go through a trust, whatever. But, again, to your point, Chris, you can designate beneficiaries to all of these, either your brokerage accounts, your bank accounts, and all of those. You can also put them in the trust as part of this process.

• 19:54Speaker 01

  Mm-hmm.

• 19:55Speaker 02

  So it's easier to distribute.

• 19:57Speaker 01

  Right.

• 19:58Speaker 02

  Upon your passing, and again, you're not a burden.

• 20:00Speaker 01

  Yeah. Yeah, we, we, we talked about this a little bit last week, because a lot of times, people think they have to be super wealthy to have a trust, and, and estate planning sounds like this really fancy word, but I tell people, everybody has an estate plan, because if you pass away, all your stuff is going to go somewhere somehow. It's just how much do you, you know, how smooth do you want this to go for your loved ones? And it doesn't matter whether the account has a million in it, or a thousand dollars in it, it's the same process. It doesn't matter how much is in it.

• 20:30Speaker 02

  Yeah.

• 20:30Speaker 01

  Um, now, obviously, you know, higher levels might, you know, require a little bit further discussion, tax considerations, and some different things, but everybody has to have this same thing in order. And so, there's, there's small estate affidavits that you might be able to qualify for, but you might want to talk to an estate planning attorney, or we talk about it as advisors. Again, we don't give legal advice, but we have some processes that we can actually help folks in this area. And we, you know, we try to have a much better discussion with all of our clients, so that we don't have our clients and their families, uh, dealing with some of this hassle later in life. I did, go ahead.

• 21:05Speaker 02

  No, no, I was, I was just to add, a lot of the people sometimes, uh, think about this process, or estate process as taboo. Like, the, the, the kids don't want to talk to their parents about it. Of fear that, "Oh, you want me dead already for, to get my ass?" No, that's not it.

• 21:21Speaker 01

  Yep.

• 21:22Speaker 02

  That's not. When I was consulting for business owners, one of the things that I was brought in for is, "Can you talk to my dad about the importance of having life insurance, or estate planning?" And the kids could not talk to their father or mother about that. They bring me as a consultant to do that.

• 21:38Speaker 01

  Yeah, one thing about it, like, I, I've been doing this for over 20 years with individuals, and one of the biggest themes that everybody has is they do not want to give money to the government.

• 21:48Speaker 02

  Yes.

• 21:49Speaker 01

  Okay? Uh, avoid taxes, and taxes, taxes, taxes, and it's very important. And then, what's funny about that is, if your estate goes through probate, you will end up paying three times as much. Now, it doesn't, it goes to the probate court, they take the money for their services. That's how the probate judge and the probate court is paid, and all the people that work in probate and all that stuff. But, you know, it costs a little bit of money to get an estate plan, or a, a living trust, I should say, uh, uh, put in place, and it also is your power of attorney for your financial and your medical. Um, but if you end up not having that, like, like I've told people before, like, if, if letting it go to probate ended up being the same cost, and all it was, was a little bit of a hassle to the beneficiaries, who, like, it's, who cares? Hey, you deal with the probate

• 22:32Speaker 01

  court, you know? But it's not. It's, you're going to pay maybe three times as much, or four times as much, as what a living trust costs, and then they have to deal with maybe a year to a year and a half of probate court.

• 22:44Speaker 02

  Correct.

• 22:44Speaker 01

  So why not put it in place beforehand? And, uh, it is a tough subject to talk about, but, you know, hopefully, more and more, and people listening to this show can talk to their loved ones, and we try to encourage people to talk to their kids, or, or whatever, whoever's going to inherit this money, have a plan. We don't want money to be handed down and then be wasted. You've worked very hard to build up this estate, you've worked very hard to buy and accumulate and invest, and don't just hand it off, and then they don't know how much they're getting, and then they blow through that money, because they really don't know what your heart and intentions are. If you're going to leave an inheritance, you can put, like, your, "Hey, I want you to do this with this money. I want you to accomplish this with this money." This is how I'd love to, you get to have

• 23:25Speaker 01

  those discussions, and not just leave the money, um, when you unfortunately, uh, check out.

• 23:31Speaker 02

  Check out.

• 23:31Speaker 01

  Check out. Hey, I was going to jump in here, um, just back to the whole thing about the concerns that the, uh, individual had about jumping out of the market and stuff.

• 23:42Speaker 01

  Um, it, it, it, jumping to cash, what you have to think about is, it does, uh, reduce a little bit of that short-term volatility, but it does not, you know, it eliminates the participation in the recovery. And we talk about, sometimes, the biggest days in the market are usually followed right after some of the worst days in the market, and even if you time it perfectly, and avoid the loss, but if you wait too long to get back in, which means the big recovery.

• 24:08Speaker 02

  You're missing an opportunity.

• 24:09Speaker 01

  You already missed out the opportunity. And the other thing I would say is that if your portfolio feels too risky, or maybe you don't know what it is, that's why having a good financial advisor can help you understand whether or not you're taking on too much risk. So change your portfolio, don't try to predict the markets. That's a much better plan. Look at your portfolio, how much stock exposure do you have? How much bond exposure do you have? Is it appropriate for your situation? And obviously, 661-847-1000 is a great phone number to call to talk to an advisor at Money Wise, if that's what you need to do. Make sure you have peace, so you're not making, uh, decisions in the middle of chaos. We're going to take a break real, real quick. When we come back, we have some great questions to follow up with.

• 24:56Speaker 01

  Is this Chris's music?

• 24:58Speaker 03

  I was a little too tall, could use a few pounds.

• 25:01Speaker 01

  This is everyone's music.

• 25:02Speaker 02

  Not, not mine.

• 25:04Speaker 01

  You don't like Bob Seger?

• 25:05Speaker 02

  No, I don't.

• 25:07Speaker 01

  Welcome back.

• 25:08Speaker 02

  Are you kidding me?

• 25:09Speaker 01

  This is Bob Seger.

• 25:10Speaker 02

  I'd just like to ruffle your feathers, man.

• 25:12Speaker 01

  You're an all-American, come on.

• 25:16Speaker 01

  I thought you had to sing this when you became a citizen. You didn't have to sing this in front of everybody?

• 25:19Speaker 02

  No, I did have to go through a lot of questions, and I, and I, I'll tell you what, man, I was good. The lady, I passed with flying colors when I took my, my, my test. Like, five minutes, and the lady was, you're good.

• 25:31Speaker 01

  You're charming.

• 25:33Speaker 02

  Thanks, Stephen.

• 25:34Speaker 01

  You, you swooned, you swooned her, huh?

• 25:36Speaker 02

  Yeah, she, she was like, she's, "Stand up, raise your right hand, I'm in."

• 25:41Speaker 01

  You probably got her a deal on, "I know a guy that does this."

• 25:46Speaker 01

  Yeah. I know a guy.

• 25:48Speaker 02

  The fir-, the first step was tough.

• 25:50Speaker 01

  Yeah.

• 25:50Speaker 02

  The first step was tough. I remember when this lady asked Mary Ann, "Hey, who proposed to whom?" Because they want to figure out, like, who, uh, like, if, if it's a fake marriage or not. You know, and Mary Ann being, being an Asian, she was like, "Well, you're an Asian like me? What do you think?" And I'm like, "Hey, girl, I want my citizenship. Can you please tone this down?" I'm like, "No, that's kind of like a weird question." I'm like, no. It did take some time, but ultimately, I, I got all through. It was a good process. I learned a lot.

• 26:21Speaker 01

  There you go. Awesome. Well, uh, this next question, uh, that came in is, I think, every, on everybody's mind, because it, uh, has to do with oil and gas prices, and, uh, all of us are feeling the pain of the pump a little bit, some of us that drive diesel trucks a little bit more.

• 26:38Speaker 02

  Yes.

• 26:39Speaker 01

  I said on Friday, I cried on my way to the office because I had to fill up, but said, I never understood where they come up with the price of gas aside from the price of oil and demand. But I heard the price is going to continue to go higher and higher. Do the owners of gas stations also add their own cost to gas? Big Ed and so Sammy, you have experience from the banking world of working with some gas station owners.

• 27:05Speaker 02

  I worked at a gas station, so and I consulted for them. I lent about almost 300, 400 million dollars of loans to gas stations in my banking career. And yes, the last part of the question is, do the owners of gas stations also add? Yes, they have the ability to, but it's not a huge amount, some cents. Unless of course, you're on a spot where there is no gas stations for miles. And you're the only gas station, you will have the ability and you can see this. If you drive on Taft Highway and, and on the five, you will see that I think there's a Chevron or mobile station there. And if you're, if you're talking about diesel prices, Chris, well, diesel price, price there,

• 27:50Speaker 02

  that station is close to $9, sometimes more because that's the only game in that intersection.

• 27:58Speaker 01

  Yeah. And I, I would think that there's, there, I also see this similar situation, like say you have a tiny little beach town that only has like two pumps and it's not like a huge parking lot. So they jack that price up because then they look at it like, if you're going to stop here and pay in this beautiful part of this little city, you're going to pay more and because it's not quantity, we're going to go for quality. So we're going to just take advantage of people that are willing to pay

• 28:23Speaker 02

  Correct.

• 28:23Speaker 01

  Eight bucks for a gallon.

• 28:25Speaker 02

  Here, here's the thing though, that I think is educational for our listeners. When you go to a gas station, the gas station owner, a good gas station owner, a good gas station manager does not do that to his or her clients. Why? Because the margins on gas are so small compared to the margins of the items inside the store. So guess what? They want to attract you with a very good price at the pump. So while you're pumping, you're going to go and grab a pack of gum. And the margin on that is 45 to 50% versus the five cents or 20 cents they are getting at the pump.

• 29:03Speaker 01

  Yeah.

• 29:04Speaker 02

  So, so the, a good manager, a good owner is very, very aware of that. And they might like weave in a cent or two or penny or two, but not gouge clients because they want to attract you to the, to the

• 29:20Speaker 01

  They want you to come back.

• 29:21Speaker 02

  Correct. That, the other thing too, I think that one, one thing is worth mentioning here is, well, we have the Hormuz, right? Now we have the Bab al Mandeb, which is the Yemeni side. So we have two choke points in the Middle East where oil flows from that are affecting the oil prices.

• 29:41Speaker 01

  Yeah.

• 29:41Speaker 02

  Saudi Arabia was able to pump its gas through the pipeline all the way to its west side of the country, right? And then ship it through Bab al Mandeb, which is that choke point between Yemen and, and the Horn of Africa. Well, now the Houthis, after they took over the western side of Yemen, they're putting pressure on those shipping lanes.

• 30:05Speaker 01

  Right.

• 30:05Speaker 02

  So now we have these two major shipping lanes that are being choked.

• 30:10Speaker 01

  Right.

• 30:11Speaker 02

  And that's what is probably going to increase our prices. With that being said,

• 30:14Speaker 01

  Demand's going up because there's not as much supply.

• 30:17Speaker 02

  But Saudi Arabia already figured out another route. They went with, they pumping gas through their pipeline over to Oman. And from there they're shipping because they're bypassing both the Hormuz and Bab al Mandeb.

• 30:31Speaker 01

  Yeah.

• 30:31Speaker 02

  So that, that's, that's, that's what potentially might keep increasing our prices at the pump. Now, me personally, Chris, if you're ask me, we have the ability to produce here in the US, but we're still, especially California. Drill, baby, drill, right? But we're still importing 70% of our oil.

• 30:51Speaker 01

  Yeah.

• 30:51Speaker 02

  From some of

• 30:52Speaker 01

  Change that.

• 30:53Speaker 02

  Exactly. We have the ability to change that. I mean, we have the ability to switch this tomorrow, not tomorrow, because we lost our refining capacity with the two, 20% of that is now gone. It's hard for, for it to come back, but we still can remedy that if we want to.

• 31:11Speaker 01

  Yeah.

• 31:11Speaker 02

  And I think it's going to get to the point where maybe oil is at like, we're paying $8 at the pump, 850, where maybe the politicians or the people in power are going to say, well, we need to do something about this, otherwise we're going to lose some votes.

• 31:26Speaker 01

  Right. Yeah. Now, we, here's what I would say. We have some interesting situations going on right now, but it's this discussion on oil and oil prices and global demand is not new, correct?

• 31:43Speaker 02

  That's correct.

• 31:43Speaker 01

  I mean, that, that's the one thing that I think sometimes overwhelms people because say you're somebody who just slowly, just recently transitioned into retirement. You have six hours a day now that you're sitting around and what you're watching the news. And this is what I mean to say, where this can really rob people of quality of life. Because these issues are very important and I don't discount that. And I want good, strong leadership, making good decisions. I want that. I want to vote correctly. I want to make good decisions and all that stuff. But at the same time, sometimes everybody thinks this time is different or this issue is new. Again, being a financial advisor for 20 years now, I can remember panic buttons every

• 32:26Speaker 01

  two or three years, the debt ceiling, the this, the that, the, and I'm not saying that it doesn't start to add up and you're like, this is going to somehow. Now granted, it feels like it's compounding, but it's not. It's constant issues. It's constant, this really robust, these, these world economies, all these dynamics, things that you don't even put into the equation, all of a sudden become a big issue. Like think about AI wasn't even around a few years ago. Well, it was, but we didn't have access to it. I'm sure other people did and this, you know, but like

• 32:56Speaker 02

  Iron Man did.

• 32:56Speaker 01

  Yeah, exactly. And I can't wait for my Iron Man suit. That is the first thing I'm getting with all this technology. But, uh, cause then I don't have to pay for diesel.

• 33:05Speaker 02

  That's true.

• 33:06Speaker 01

  I can just fly.

• 33:06Speaker 02

  Yeah.

• 33:07Speaker 01

  Land on, can I, is, can I land on the roof?

• 33:08Speaker 02

  Yes, yes, you have space.

• 33:10Speaker 01

  Awesome.

• 33:11Speaker 02

  Yeah.

• 33:11Speaker 01

  That's great. That's wonderful.

• 33:12Speaker 02

  Yeah, he can land on the, on, on the roof of the World Works.

• 33:15Speaker 01

  There we go.

• 33:16Speaker 02

  Yeah.

• 33:16Speaker 01

  There we go. But I just mean to say, like, I don't discount all the realities and the, the real, true things going on as a Kern County resident, uh, of a very robust oil industry and watching what's happened to it, my heart breaks.

• 33:29Speaker 02

  Yes.

• 33:29Speaker 01

  I wish we would get better leadership in place and all that stuff. But then don't let that rob you of having a good, solid financial plan, investment strategy in place, focus on what matters most. Mental health and, and emotional health is, is dwindling unfortunately for retirees. It truly is happening. Loneliness is at an all time high because people are sitting there and watching or uh, either watching the news or, or just social media and they're not plugged into, you know, groups and, and affinity groups and, you know, the lodges and everything else that people used to be part of, like

• 34:04Speaker 02

  And I speak that, I speak for that from, from experience, like my, my, I mean, I have, I have two parents, I have my mom and my dad. One chooses to be very involved and do things and one chooses to be on social media and TV and all that. And you can see the health, both mental and physical dwindle for the person that's just sitting in front of their iPad and TV versus the other one that chooses, no, I'm still going to go to the coffee shop. I'm still going to hang out with my friends. I'm still going to have friends come over and have conversations. I'm still going to be involved and that's what's important. I mean, to your point, six hours or something we spend, that's the average. A lot of people spend in front of these devices we have today. And you're like attacked from every corner. You have your iPhone, you have your iPad, you have your TV, you have your, it's, it's constant.

• 34:48Speaker 01

  Yeah.

• 34:48Speaker 02

  That's how they sell you on stuff.

• 34:50Speaker 01

  Yes.

• 34:50Speaker 02

  Right? And if you're not careful

• 34:52Speaker 01

  And they know exactly where you are and they know exactly what you're doing and yeah. So, and actually I, I don't know if anybody's heard here locally, um, Brian Easter is an administrator, I forget which school district he's with, but he's making waves right now in really trying to get a, a lot of the electronics out of the classroom. Because the impact that we're talking about right now has a huge impact on young people's mental health.

• 35:14Speaker 02

  Again, I'll speak from experience, Chris. I have a 13 year old and I made the mistake of giving him an iPhone when he reached, when he was 12. And that was a mistake from my end because I kind of like bent to the pressure, the peer pressure, oh, my friends have phones, oh. So I, I was like, okay, I talked to some of my friends at what age they gave their, the, the phones. I'm like, okay, I could do this. I'm already feel like a little bit rigid, that rigid parent, that unk, that, that's not fun. So let me give, let me give a phone away, but I'll tell you what I see, Chris, and almost like ADHD type of thing, like, uh, attitude, like no attention to details. Attention span is so very, very narrow.

• 35:58Speaker 01

  Right.

• 35:58Speaker 02

  And that's from experience with my own kid.

• 36:00Speaker 01

  Yep.

• 36:00Speaker 02

  And I have, I feel like I have a very good kid. I'm blessed, but that attention, man.

• 36:04Speaker 01

  Yeah.

• 36:05Speaker 02

  And I think it stems from just the usage of electronics.

• 36:08Speaker 01

  Yeah. Well, he's, he's actually gotten a, a bill signed. I think Gavin Newsom signed it into place. And so like, you know, like politics aside, kids' health is very important to me. I used to be an educator, Seth in the office was an educator for a long time. Like, uh, it's crazy to think about kids in school nowadays, like they're, they're staring at screens all day long and then they go home and guess what they do?

• 36:31Speaker 02

  Screens.

• 36:31Speaker 01

  Stare at screens. And so I'm really excited to see, uh, kind of some, some pressure getting put, uh, you know, in the education system, um, to, to try to, to help with that. So kind of a tangent there, but great. Any, any other thoughts on, on gas? I think you kind of covered that.

• 36:46Speaker 02

  No, it's just, just going back to that question, there's multiple steps. Oil, you know, you pull the oil out of the ground that, that costs certain things. Then you ship it, that costs, that's an additional cost. Then it gets refined, then it gets shipped back to the, the, the end user. Those are all costs. In addition, we live in the great state of California with the highest taxes on, at the pump.

• 37:08Speaker 01

  Right. You know, that, that's Yeah, we felt the most. Yeah. Cause what you were mentioning though is like inflation, remember? So when, when you say gas prices are going to go up and up and up, if, if inflation is there, uh, they're raising interest rates right now to try to, try to keep inflation at bay. Well, we just talked about that being a cost. So refiners and companies that are doing these services and, and refining this oil, their costs are going up. And so unfortunately that, that ends up hitting us at the pump. The taxes don't help either. But I, I, I mean, I think that's a very common question is like, do, does each gas station just kind of choose however much they charge and this and that? And it's like, no. You know, they're, they're, they're going to try to keep the price low because like you said, they don't make a large profit margin on those. They make more at, at, at selling other services in their

• 37:53Speaker 02

  In the store.

• 37:54Speaker 01

  In the store. So, so they're not going to want to charge you too much at the pump or else you won't stop there and buy other things. So thanks, Big Ed. Great conversation. Great question. If anybody else has another thought, you can always jump in. 661-396-1000. Had another one that kind of spills over from our conversation last week, and I just want to account it, or just address it. It says, "I'm glad you talked about the diocese story in Fresno," and I'm sure that I misspelled that one. But my question is, is can a company really just take away a pension that they were counting on? That can't be legal. Well, unfortunately, it is legal in a sense that if a company is going bankrupt, then it's not like it's legal. It's unfortunately, the

• 38:38Speaker 01

  company has ran out of money. And some of the money going into that pension program is funded by the company. So if the company is going bankrupt and like, you know, folding, then unfortunately, that pension is going to have a major issue. So one of the things that I think there can be a misconception of is, there's a portion of a pension that's a pay-as-you-go system. How many people are on the books that are going to be due money? How much money's flowing into it? We have investments that are making a certain return? There's all this calculation that's going on that's telling you what a pension's health is? How healthy is this pension program? And so if all of a sudden, you have a company

• 39:19Speaker 01

  that, hey, we're going bankrupt, we can't feed it anymore. That's where we mentioned last week that there is an organization called the Pension Benefit Guarantee Corporation, PBGC. They do step in. So when there's a pension program in place, a lot of times, they're paying into this. Now, not every single pension is paying into this. So you may be part of a pension program that's not paying into this. So if it goes bankrupt and it goes away, there's no coverage.

• 39:49Speaker 02

  It's not a requirement, Chris, for pension plans to pay into this?

• 39:55Speaker 01

  Maybe it's over a certain amount.

• 39:56Speaker 02

  Okay.

• 39:57Speaker 01

  Maybe over a certain amount. So if, yeah, I can't, I can't even think. But to give you some perspective, so there's about, currently, there's about 5,000 failed plans that receive their pensions through the PBGC.

• 40:15Speaker 02

  So if your pension, you're paying into this, like a certain amount on a regular basis, this PB

• 40:25Speaker 01

  Yep, PBGC.

• 40:27Speaker 02

  Takes it and invests it, gets some type of return over time. And then eventually, if something was to happen to your pension, they step in?

• 40:35Speaker 01

  It's almost like the FDIC.

• 40:37Speaker 02

  FDIC, yeah.

• 40:38Speaker 01

  It's almost like FDIC insurance for depositors, for bank accounts. It's in the pension world. So again, 5,000 failed plans on the books. There's about 926,000 retirees that this affects, that their pensions have gone away. Some pension programs were healthier than others. So some people might be getting 40% of what they thought they were going to get, or 50%, or maybe even a little bit more. But there are some people that are literally getting pennies on the dollar. And one of the most notable examples of that was Enron. They had a large investment in their pension program, in Enron stock itself. So then when

• 41:20Speaker 01

  Enron went bankrupt, the stock went belly up, all the money that was in the pension program became worth much, much less. So then when it gets kicked over to the PBGC, all the people that thought I was, I'm going to be getting 40 grand a year for the rest of my life, well, now you're getting four grand a year for the rest of your life. You're getting a much, you're getting pennies on the dollars, sometimes, on some of these different programs. So it's technically, if this sounds weird, it technically is legal, because businesses can fail. It's a risk to a company. Why have so many companies moved away from pension programs? Is because it's a big liability on the books, and people have been living longer and longer and longer lives. When pensions started, the average, you know,

• 42:05Speaker 01

  adult might have lived to be 68 years old. So you don't have to pay a pension for very long. Well, now, average, you know, lifespan is 80s, you know, between male and female. Women live a little bit longer, and you can speculate on why that is. Maybe they're smarter, and they make better decisions. I don't know.

• 42:20Speaker 02

  Yeah. I mean, I've seen some videos about that.

• 42:23Speaker 01

  Yes. Yeah, yeah. So, so yeah, it technically is unfortunately legal. Now, they couldn't have a bunch of money in the pension program and just say, okay, no, we're not going to pay it. Like, you can't do that. That would be illegal, and there would be a lawsuit that would come, because the people that were due pensions or legally do those pensions. But if a company is out of money, if a company has become insolvent, they technically can basically put out information to all the people that are due money to say, hey, we're filing bankruptcy, the pension program is not in good health, and you may be getting a cut in your benefit. So again, it's, we talked about the three-legged stool that was always around with planning, and it was pension, savings, and social security. Social security's

• 43:08Speaker 01

  under pressure for almost the same reasons

• 43:11Speaker 02

  Yes.

• 43:12Speaker 01

  That we're talking about here.

• 43:13Speaker 02

  I was about to say the same thing, too. With social security, it's almost the same thing. People are expecting a cut of about 20% by 2030.

• 43:20Speaker 01

  But it's a pay-as-you-go system. So as long as a business is still around, there's not a big reason that a pension should go completely away, unless you have a situation like Enron, where they had a bunch of their stock in there, and then their stock went worthless. There's some different parameters now of how they can invest that money. There's a lot of, still some, you pat my back, I'll pat yours, and put your, a bunch of your pension money in this investment over here. So there is some stuff that goes on behind the scenes, and most people don't realize kind of that's what's going on in those pensions. Same thing is going on with government pensions. If you're a teacher, or a police officer, or firefighter, or one of those types of jobs, and you have a government pension, it's a big pool of money, you're paying into that system, even after you retire, there's new

• 44:05Speaker 01

  employees paying into that system. So the same pressure that social security has, these pensions have. Meaning, a lot of businesses are operating with less employees now. So there's less employees paying into the pension program. There's more of these pensioners that are getting their monthly amount, and that puts pressure on that pension program. So eventually, those businesses are having to feed more and more money into this pension program, and companies don't like that.

• 44:31Speaker 02

  Yep.

• 44:32Speaker 01

  And so unfortunately, that's why you see the world of the pension going away. I think Justin mentioned only, you know, 8% or something of publicly traded companies even offer a pension anymore. I think it might be 15% or so of private companies. It's a very low number of people that offer pensions anymore. So unfortunately, it falls on your shoulders then. It's 401Ks, it's savings. If you can get a match, that's a little bit of a, you know, grease on the wheels, you know, like, like, try to do what you can. But unfortunately, it's going to be social security with its pressures, and your own savings is going to get you to financial independence. Buying assets, whether it be stocks, bonds, investments, real estate's another way that obviously people create passive

• 45:14Speaker 01

  income. Business ownership's another way you can create passive income, or build it up and sell it, and then have the money to invest and live the rest of your day. So different ways to kind of get there. I wish it was easier for most folks. It's a lot of pressure, a lot of challenges. And so, so yeah, I wanted to, wanted to address that, though. So technically, unfortunately, it is legal if a company is falling, falling apart. Says, "Can you recommend a good estate planner?"

• 45:47Speaker 02

  Yeah, Chris Boster.

• 45:48Speaker 01

  Yeah. So, so, you know, we do have a process here where we can review some things and have access to be able to do a simple living trust. I have worked with Kyle Jones here in Bakersfield, Kevin Danley, a couple of different folks that we have great relationships with. And speaking of, Sammy and Dustin, tomorrow, we're actually going to be joined with Matt Clark and Chris Hagan of Chaincone Clark. So you probably could ask some questions tomorrow, if you tune into the show. But if you do want to sit down with a, with an estate planning attorney face to face, there's some great ones here in the Bakersfield community.

• 46:22Speaker 02

  But you also can do it here at MoneyWise, through a system, or through a simple ones, right?

• 46:27Speaker 01

  Yep, simple estates, where it's not super complicated. You know, when I say super complicated, like, a special needs trust, like if you have a child that has special needs, that can add some complexity. Later in life, a few different remarriages can offer a level of complexity, that it might be better to work with an estate planning attorney who can really put that stuff together for you. But if you basically just have some accounts and real estate, and you're just wanting to put together a living trust that will keep your family out of probate court, we do have a process to be able to help folks walk through and get that done, through that process. So.

• 47:01Speaker 02

  I don't know if we have some time for this last comment, Chris, but.

• 47:07Speaker 01

  Yeah, we can, we can address it.

• 47:09Speaker 02

  Sure. "Very frustrated. Hope you can help. Semi-retired. I have rentals since 2011. Have used QuickBooks. Cost was $200 to maybe $400. Now, it's $1,500 a year, desktop, $115 to $140 a month, online. I don't like, I don't want, online, but because I need the class breakdown is why it is so expensive. Help, I'm downsizing to four rentals and need any recommendations. Thank you so much, Vicky."

• 47:38Speaker 01

  Yeah, Vicky, you are experiencing the same feeling that everybody that has used QuickBooks for years. I mean, I know people used QuickBooks, that they would buy the desktop version and use it for 10 years, and it was a one-time purchase. And unfortunately, everything is going online, everything is becoming that type of a system, because then obviously, they can update the system on an ongoing basis. They can, you know, laws change, things change. You know, they don't have to come out with a whole new one-time software. And so unfortunately, you are with a lot of people that are feeling that pressure, because it seems just to be going to go getting more and more and more expensive.

• 48:17Speaker 02

  That's right.

• 48:18Speaker 01

  And it is. But to an extent, I will say that they are doing a better job of then keeping it up to date. And it's not an outdated version, and different things like that. But unfortunately, it becomes part of the cost of doing business, if you need that. Some of the benefits are, there's AI tools that you can use now that can really simplify some of your process, using that online platform. And the thing I will say is, there are some, there are some cheaper, or less expensive versions of QuickBooks that you can look into. Some of these companies that are trying to compete with QuickBooks. And if you're simplifying and downsizing to only, you know, a few properties and stuff like that, you

• 49:00Speaker 01

  might be able to look into a couple of competitors, you know, look into some competitors that might have a lower cost, because you don't necessarily need the robust, all the crazy things that QuickBooks is charging you for, and all their years of experience, and their brand, you're paying for their brand. So do a quick search of saying, hey, what are some inexpensive alternatives to QuickBooks? And if they are online, you might have to make that jump, but then you can save a little money.

• 49:27Speaker 02

  Yeah, there's a ChatGPT free version that you can ask that specific question. Hey, give me some competitors of QuickBooks that I could, and here's my situation. And I think you will be able to get three or four different names.

• 49:39Speaker 01

  Yep. Sammy, thanks for a great show. Steven, thank you for all that you do, sir. You do a wonderful job. Hey, you guys are what make the show great. Thank you for all your comments and questions. Reach out, 661-396-1000. Have a great night. See you tomorrow.

• 49:52Speaker 04

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